Testimony on Evaluation Science & Our Health Care System by John M. Eisenberg, MD, MBA
Administrator, Agency for Health Care Policy and Research
U.S. Department of Health and Human Services

Before the House Ways and Means Subcommittee on Health
April 17, 1997

INTRODUCTION

Good Afternoon Mr. Chairman and members of the Subcommittee. It is a pleasure to appear
before the Subcommittee in my first full week as the new Administrator of the Agency for Health
Care Policy and Research (AHCPR). I enjoyed my work for you as Chair of the Physician
Payment Review Commission, and I look forward to working with you in the yew to come. I
especially want to thank you for giving me the opportunity today to address the issue of
evaluation science and how it relates to coverage decisions in our health cam system.

Market forces have spawned unprecedented changes in our health cam system. The,
health we market today is characterized by intense price competition, with purchasers
demanding greater accountability and value. These pressures are leading health plans
and facilities to give increasing scrutiny to capital investments and decisions to cover new
medical procedures or services. In an atmosphere of constrained resources, it Is hardly
surprising that we arc facing increasing demands to prove that we are getting real value
for the health care dollars we spend. Unfortunately, decision makers often lack the
scientific evidence on effectiveness that would help them judge the relative value of
alternative health technologies.

One result of our shortage of scientific evidence is our health care system's wide variation
in use of services. Often, this occurs when them is ambiguity on the effectiveness of the
procedure or service. There is also variation in what services are covered. For example,
a recent study on laser therapy demonstrated that there is substantial variation in coverage
on new technologies. A 1994 General Accounting Office Report found substantial
variability among Medicare carriers with respect to denial rates for services screened for
medical necessity (GAO Report, 1994).

Variation also exists in medical practice among states and local jurisdictions. For example, the
rate of prostate biopsy in Dallas, Texas is 29.6 per thousand of Medicare enrollees, compared to
McAllen, Texas where it is 8.3 per thousand of Medicare enrollees (Wennberg, 1996). Health
services research has shown that these differences can be attributed in large pall to a lack of
knowledge regarding the efficacy and effectiveness of medical technologies. (Steiner, 1996 &
1997). A study examining the high variability in the m of electroconvulsive therapy found that a
primary cause was the lack of knowledge regarding the effectiveness of the procedure (Hermann
RC, 1995).

Another consequence of inadequate evidence on effectiveness is that old technologies linger even
when they have been surpassed by better ones. in 1989, 1 published a study that examined old
and new technologies in hospitals and found that new technologies did not replace older
technologies, but were simply added to the hospital regimen. For example, we found only a
small reduction in one older technology, oral cholecystogram, after the introduction of a new and
closely better technology, gallbladder ultrasound (Eisenberg, 1989).

The lack of scientific evidence on the effectiveness of medical procedures and
technologies is troublesome: it complicates the treatment decisions physicians and
patients face, makes it difficult for plans to make appropriate coverage decisions, and
can lead to appeals of coverage decisions in court.

Technology and the Cost of Medical Care

Mr. Chairman, let me make two points at the outset. First, when I refer to technology, I am
not only referring to expensive high-technology devices such as magnetic resonance
imaging, but also to the vast array of "little ticket" technologies, such as pap smears and
other common medical procedures and services. These small-cost technologies can add up
to big expenses. For example, an AHCPR funded recommendation for preventing
pressure ulcers led to the finding that use of low-tech treatments for pressure ulcers could,
in just two states, New Hampshire and Vermont, result in Medicare savings of over $1 million
annually.

Second, as my earlier prostate example suggests, the need for scientific information
related to the appropriate use of technology does not end with a medical coverage
decision. Even when medical coverage is not an issue, clinicians and patients need the
latest scientific information to determine whether the procedure or service is appropriate
in each specific instance. They need to balance carefully the risks and benefits of every
medical intervention and any alternatives for each individual patient's circumstances.

This is critically important because there is a growing body of scientific research that
demonstrates that patients often receive services that are not clinically indicated. For example,
researchers at the RAND Corporation found that up to 30% of patients whose medical records
they reviewed received medical procedures that were not appropriate when measured against
rigorous clinical standards established by experts. They also concluded that the appropriateness
of another 10% of procedures was equivocal (RAND Studies). Other researchers have estimated
that only 20% of technologies now used in the practice of medicine have been specifically
evaluated (OTA Report, 1994).

When medical technology is used appropriately, it can improve health, and in some
instances, reduce costs. For example, in l991, AHCPR conducted a technology assessment on
laparoscopic cholecystectomy on behalf of Health Care Financing Administration (HCFA).
Based on AHCPR's recommendations, HCFA covered this procedure, which has subsequently
resulted in reduced hospital length of stays. This finding is borne out in a recent study funded by
AHCPR, in which patients with laparoscopic cholecystectomies had hospital stays that were
one-third less than those who underwent the standard surgical procedure.

Another example is AHCPR's assessment of routine laboratory tests in end stage renal
disease (ESRD) for patients undergoing dialysis. In 1994, there were 200,000 individuals
receiving dialysis at a cost of $7 billion annually. An AHCPR health technology review
found that them was little scientific data to support the routine use of some of the tests
performed in patients undergoing dialysis. Clearly, millions of dollars can be attributed to
the cost of testing - some of which is unnecessary.

At the same time, technology can increase costs. Excessive and inappropriate use of now
drugs, devices, and other services is driven by many causes -- economic incentives for
physicians and hospitals, the practice of defensive medicine, and insurance systems that
pay for technological interventions more generously. Poor understanding concerning the
effectiveness and outcomes of medical technology is also a contributing factor.

Another problem is the use of ineffective technology, which can raise costs but not
improve patient outcomes. Also, the rapid rate of development and diffusion of new and
promising technologies often means that timely data are not available to make a scientific
judgment regarding their effectiveness. A recent study found that a majority of medical
directors of health plans cited the lack of timely data on the safety, effectiveness, and
cost-effectiveness as the major barrier to establishing optimal coverage decisions. As a
result, we need to develop innovative approaches to acquire the necessary data (Steiner,
1996).

AHCPR's technology assessment on lung volume reduction surgery (LVRS) is a case in
point. This technology assessment concluded that there was insufficient evidence on
which to make a scientific judgment regarding the effectiveness of LVRS. AHCPR
recommended that coverage be granted within the scope of a clinical trial, which is now
being conducted by the National Institutes of Health. AHCPR is supporting the
cost-effectiveness component of that trial. It is significant that this study will also include
measures of patient preferences and of quality of life, because the role of these factors are an
important component of the scientific knowledge we hope to derive. It is our hope that the
collaborative efforts between the NIH and AHCPR will yield the information needed to make an
Informed coverage decision on LVRS.

Another mechanism that should be explored u a complement to clinical trials to evaluate
technologies is the "Centers of Excellence" approach that was used in coverage of
cardiac transplants. These Centers are defined by having a demonstrated expertise in
performing a given procedure or technology. Additionally, patients are registered and
outcomes and effectiveness data are collected throughout the episode of care to help
further refine the technology or procedure being performed.

Working Together

Approaches involving cooperation between an insurer (in this case, Medicare), the scientific
community, and advocates of new technology will become increasingly essential in the years
ahead. Unless we address the need for solid. scientific evidence on the benefits and costs of
medical technology, we run the risk that future efforts to contain health cue spending will inhibit
innovation. This could mean that better technology -- even more cost-effective technology --
will not be developed, and American leadership of a global industry could be lost.

The role of the government is pivotal in this regard. h is the largest purchaser and
provider of health cm services, accounting for at least 45% of all health care spending.
For some procedures federal dollars account for the lion's share of expenditures. For
example, Medicare and Medicaid expenses for coronary stay bypass graft procedures exceed $8.7
billion and represent 56% of the total expenditures for this procedure (AHCPR, 1992). As a
purchaser of medical care, the federal government has a compelling interest in technology
assessment and those decisions need to be based on the best scientific information
available.

Through the work of the National Institutes of Health and AHCPR, the federal
government also helps to build the underlying research, the basic science for
technological innovation and its assessment. In addition to conducting technology
assessments for HCFA and the, Department of Defense, AHCPR supports work that is
critical to the field of technology assessment, such as:

the effectiveness and cost-effectiveness of alternative treatments and services
provided in community settings (including stroke and cardiovascular disease,
prostate disease, diabetes, and pneumonia and other common conditions);

research on the functional outcomes of treatments for patients and the importance
of involving patients in treatment choice. For example, an AHCPR research project
developed a "Shared Decision Making Program," which included an interactive
videodisc for use in helping patients with benign prostatic hyperplasia make
informed choices among treatment options. Pilot studies have shown that patients
who view the videodisc choose surgery less often Ow other patients;

the development of medical information technologies such as computerized
patient records, computerized decision support systems, hospital and ambulatory care data
systems that provide the ability to conduct this research while providing additional resources to
clinicians. For example, an AHCPR-supported study found that AIDS patients who use the
Comprehensive Health Enhancement Support System (CHESS) had fewer visits to doctors
office, or spent 17% less time in doctors' offices. These patients have lower health care costs and
fewer and shorter hospitalizations. AIDS patients using CHESS had 20% lower treatment costs
overall; and

research to improve the methodology underlying technology assessment. For example,
AHCPR supports the development of outcomes and effectiveness measures such as the "VF-14,"
an index of functional impairment in patients with cataracts.

Our research demonstrates that technology assessments, done scientifically, I can provide the
infrastructure to help reduce practice variation and to allow for informed decision making. This
summer we will implement our new Evidence-Based Practice Center program through which we
will provide public and private sector organizations with scientific information to improve the
quality, effectiveness, and appropriateness of clinical practice. The Centers' evidence reports will
provide critical evaluations of the available scientific literature regarding clinical interventions
and technologies. The topics for the evidence reports will be selected from nominations by the
private and public sectors. With the support of the Appropriations

Technology Assessment Criteria

Use of in explicit and defined process

Careful selection and definition of the topic

Public participation

Comprehensive search for the highest quality evidence available

Review and rating of the evidence

Use of analytic techniques appropriate to the level of evidence found

Review of the draft assessment both by experts and potential users

Update of the assessment when appropriate

Evaluation of the process and its results

Committees, we have set aside funds for this effort and will fund about 10 evidence based
practice centers this summer. The Centers will better enable AHCPR to serve as a
"science partner for both the public and private senior. These reports will also assist
HCFA, DoD, VA, states, and private sector purchasers to make informed decisions on
the effectiveness or appropriateness of specific health care technologies.

Next Steps

Mr. Chairman, from my work in the area of technology assessment and the experience of
AHCPR in technology assessment I conclude that we face a number of important
challenges in this area:

Both the public and private sector need to devote more resources to technology
assessment. Choices are being made everyday in the health care system. These
choices run the risk of being determined solely by cost considerations, unless we
assure that the scientific evidence is available to make informed decisions. Failure to
address this will put. medical innovation at risk. It is interesting to note that, as a
proportion of national health care expenditures, total funding for technology
assessment in other nations is 18 to 160 times higher than in the U.S. For example,
technology assessment expenditures in France we 22 times higher, (Holohan,
Lancet 1996) despite the fact that its population is 2 times greater than the Medicare
population alone.

The results of technology assessments need to be In the public domain so that a
potential users of the technology or service can be informed. The important
methodological details of publicly funded research are by definition available to
all those interested in bow results were reached. Interested parties may include
patients/consumers, providers, plans, and providers. The same acres may not be granted
for research done for proprietary reasons. Additionally, small firms such as biotechnology
start-ups, may not have the resources to conduct effective outcomes studies alongside
their basic science and clinical investigations.

We need creative collaborations between plans, the scientific community, and developers of
innovative technology to collect data on patient outcomes and costs. Without
better approaches to securing these data in timely manner, we will never be able to
assure that medical coverage decisions am based on science rather than economics. We